A slightly old article but quite relevant given what’s happening with Europe at the moment.
Each looks at the prices of hundreds of things we commonly spend money on, including bread, cinema tickets and pints of beer - and tracks how these prices have changed over time.collects more than 100,000 prices of goods and services from a wide range of retailers across the country - including online retailers.
So items are weighted - i.e. given more importance in the inflation indexes - according to how much we spend on them.
What goods would you include in the inflation measure? Do you think this is accurate because a young person would use a different amount of goods compared to an older person (e.g. fuel)? How would you improve it if you don’t think its not calculated well already?
Here’s the article: http://www.bbc.co.uk/news/business-12196322
Price indices cannot account for unprecedented technological innovations that radically change consumer needs and habits. Take smartphones, for example. Their functionality simply did not exist decades ago--or, at least, the cost to achieve it would have been astronomically expensive. So, even if inflation and income figures were to suggest that today's consumers have less purchasing power than their predecessors in 1950 (I'm making that up), the greater expense of a loaf of bread or carton of milk may be more than offset by how enormously cheaper it is to do and acquire certain things that were simply unavailable before.
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